Carbon Offsetting: How New Tech is Changing the Game
Carbon offsetting is under fire. Offsetting has been used by corporates and sanctioned by regulators as a means to compensate for carbon emissions through investing in tree planting and green infrastructure projects. Yet consumers and enterprises have watched 2.2M acres of the Amazon burn, read the exposés of the lack of accountability in green infrastructure projects, and questioned the value of offsetting programs to build green energy capacity and reforest.
Critics argue that most offsetting programmes carry out too little monitoring, are based on shaky science, and distract from long term change to the status quo. Yet companies continue to launch offsetting options for consumers: which the cynical could claim are sometimes intended to greenwash brands as a more sustainable option without changing operations, and sometimes simply moving the cost of sustainability onto consumers. A 2015 paper found that global emissions could have been reduced by 600M tonnes if countries had cut emissions rather than buying offsets. As companies consider carbon offsetting as part of their transition to more sustainable business operations, there are ways they can improve their impact. Digging into the industry uncovers a new breed of companies using 3 new areas of tech to make offsetting — both tree planting and green infrastructure development — a real tool to transition us to a more sustainable system.
1. Improving Transparency
Trees will only begin extracting carbon from the air after c.7 years, and may not completely offset the required carbon for a century. Now companies are beginning to focus on transparency as a value proposition to customers, as tech makes it possible to track and monitor tree planting and survival. Offset Earth, for example, posts the purchase history of their carbon credits and tree planting on their platform and monitors tree plantations via GPS. Projects also focus on tree types that are less subject to deforestation risk while providing greater offsetting potential: such as mangroves that sequester 4x more carbon than rainforest.
Blockchain is claimed to be the future of verification, in this sector as well as others. In this use case, however, the long-term nature of the monitoring (and the massive energy toll of blockchain computing) means that more enduring and proven solutions are needed. Poseidon, as an example, analyses the carbon footprint and processes micro carbon credits at the point of sale to offset even small purchases. Yet the massive energy demand of blockchain processing is not offset. Satellite analysis offers a more long-term solution: startups such as Orbital Insight can track and predict deforestation patterns to intervene in advance, and plan plantations for lower-risk areas.
2. Incentivising Communities
A major shortcoming of first-generation tree-planting and offsetting projects was failing to consider the human incentives to maintain and protect tree planting projects. A 2014 UN pledge to halve deforestation by 2020 has failed, with record deforestation by 2018. Public commitments are simply not enough. Areas which have been deforested will continue to be deforested unless structures are put in place to ensure that there are benefits for communities in keeping forests standing.
Many companies have attempted to set up market incentives or simply shipped young plants to local communities, without providing the necessary tools for planting. In contrast, Eden Reforestation Projects employs local communities directly to plant and protect trees to ensure a reliable income, as well as providing the tools to do so and working with local groups to establish land rights over plantations. The project currently directly employs more than 1000 people and has planted more than 225M trees since 2006 — with a monitored 80–90% plant survival rate.
Meanwhile, Dendra is bringing together both monitoring and human incentives. The start-up, still at early stage, both monitors and plants trees via drone. By training local people to be drone pilots, they open up a wider field of higher-paid career options, rather than unskilled roles as seedling planters.
On the supply side, a new breed of consumer-facing start-ups is ensuring a continued flow of funding through savvy UX. Rather than one-off purchases, startups like Offset Earth are offering consumer or enterprise subscriptions. Individuals can track the growth of their personal or company forest, and add interactive badges to their sites to publicise their commitments.
3. Transitioning to Carbon Capture
The tech to produce greener energy already exists. Decades of strong investment into renewable energy sources, partly powered by offsetting, has driven renewable energy to supply ⅓ of global power capacity. Just planting trees, without investing in capacity, is merely a delaying tactic. Yet our delay in transitioning to clean technologies has made removal of a forecast 100bn-1,000bn tonnes of CO2 an imperative to keep temperature increases below 1.5C. Carbon capture and removal — removing carbon from the air to be permanently sequestered or recycled into a carbon-neutral fuel — has long been considered a potential tool to prevent climate change, but the costs of technology have remained prohibitively high.
The clear consumer demand and climate imperative has driven a flow of venture and strategic capital towards CCR, which is in the early stages of making the technology accessible at scale. $188.8M has flowed to just the top three competitors, Carbon Engineering, Climeworks and Global Thermostat, which are improving the unit economics of the process by using captured carbon as a secondary income source. Carbon Upcycling uses CO2 to reinforce concrete, while Climeworks sells CO2 to carbonated drinks manufacturers, agriculture and for carbon-neutral fuel. The latter is also moving directly to the consumer market with affordable subscriptions, starting at €7 per month for offsetting 15% of the typical traveller’s yearly carbon footprint. Funding for Carbon Engineering and Global Thermostat also comes from strategic investors and including oil and gas giants Chevron, Occidental Petroleum and Exxon Mobil; we expect to see more strategic investors in invest in and partner with CCR startups to hedge against the future of carbon neutral fuel.
Offsetting alone can’t save us from climate change. But developing tech and understanding the incentives that keep forests and projects standing can make offsetting a legitimate means to develop green infrastructure, and protect and grow natural resources.
Our advice? Question the projects your money is funding, and remember that it will only buy us time to change our systems.
At Founders Intelligence, we work with Offset Earth to offset our current and past carbon footprint, from our foundation 7 years ago. Yet our focus as a company is also on changing systems: helping companies to rethink their industries, and to work with both industry and startups to transform their businesses into more sustainable and ethical actors